[isatrader]

I thought it would be helpful to members to do some quiz questions occasionally, and so as I have a bit of time I've attached is a mystery chart with a set of questions for you to answer.

1. What is the Stage of this stock?
   
2. Is price above a flat or rising 30 week MA?
   
3. What is the volume doing?
   
4. Is the relative performance versus the S&P 500 above or below the zero line?
   
5. Is the relative performance zero line itself down, flattening or rising?
   
6. Is there significant near term resistance?
   
7. Would you buy this stock?
   
8. I've also included the Sector chart and the S&P 500 at the time, so that you can evaluate their Stages also to complete the analysis.
   

Thanks to the two that answered the quiz. It's time to reveal the mystery chart, which was CSIQ in the Solar sector.

I've attached the marked up chart, which shows it was at the Stage 2A breakout point and the 30 week MA had just started rising. Volume picked up to around 2x the average on the breakout week and was trading above a flattening zero line. Most of the near term resistance had been cleared on the breakout with only the early 2012 high to clear, but it had rallied directly off the bottom to make the Stage 2A breakout and so was quite extended short term. The sector chart had only just moved into Stage 1A, and was recovering, and meant that CSIQ was one of the leaders in the sector as it had already formed a large Stage 1 base and was breaking out, and so more research on other members of the sector would have been necessary to see if it was the best candidate in the group. The S&P 500 too was recovering after a failed Stage 4 breakdown attempt in November 2012 and was attempting to make a Stage 2 continuation move to new highs. And so it would have been a investor buy imo, but not quite an A+ candidate, more like an A- to B+ prospect due to the few issues I highlighted.

I've also attached the up to date chart, which shows that investors that got in at the Stage 2A entry point had to sit through a pullback to the 30 week MA of around 30% from the entry point after it's initial breakout and would have seen a range of around -40% from the initial high following the breakout as it hadn’t yet made a higher swing low and it was fairly extended short term at the Stage 2A breakout point. But nevertheless it managed to hold above the rising 30 week MA on it’s initial pullback and formed the secondary investor B entry point where an investor would add the second half to their position.

Since then it’s been up over 800% in it’s Stage 2 advance and the investor stop loss would now be up to around $25 just over a year later, and so you would have around 465% in gains protected so far, which is an amazing run for any stock. But I imagine a lot of people would have exited the stock on the first pullback as it had gone from a 15% profit following the initial breakout to -30% on the first pullback, and is why position sizing is an important consideration, as the pullback from the entry point was only 1.5x the 52 week average true range, which is quite normal.

I think this is a good example to show, as the initial Stage 2A breakout lacked decent relative volume on the the weeks following the breakout and could only manage to close one week above the 2012 high before rolling over and pulling back. But it then formed the secondary entry point and volume started to increase as it made the first continuation move into Stage 2. So it shows that it can take a while after the Stage 2A breakout point to get going and a lot of people got shaken out on that first pullback before it started it's dramatic Stage 2 advance with the all important heavy volume that so many mediocre Stage 2 runs are lacking.